Madison Investments, an investment advisor, released its “Madison Small Cap Fund” fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. The Madison Small Cap Fund completed a great year in the fourth quarter. For the fourth quarter and the entire year, the fund generated strong absolute and relative returns. Growth continued to beat value, while large caps continued to outperform small caps on average. In the fourth quarter, the fund (class I) returned 4.04% outperforming a (0.33%) return for the Russell 2000 Index and a (0.62%) return for the Russell 2500 Index. The outperformance was driven by stock selection and favorable allocation. In addition, looking at the entire year, the performance exceeded benchmarks by an even greater margin. Despite the Russell 2000 Index's 11.55% annual gain, the fund outpaced the benchmark by a whopping 900 basis points, reporting a 22% overall return. Although advantageous sector allocation also helped, stock selection accounted for the vast bulk of the outperformance. In addition, you can check the fund’s top 5 holdings to know its best picks in 2024.

In its fourth quarter 2024 investor letter, Madison Small Cap Fund emphasized stocks such as AMN Healthcare Services, Inc. (NYSE:AMN). AMN Healthcare Services, Inc. (NYSE:AMN) offers healthcare workforce solutions and staffing services to healthcare facilities. The one-month return of AMN Healthcare Services, Inc. (NYSE:AMN) was -9.54%, and its shares lost 62.04% of their value over the last 52 weeks. On February 14, 2025, AMN Healthcare Services, Inc. (NYSE:AMN) stock closed at $23.42 per share with a market capitalization of $891.69 million.

Madison Small Cap Fund stated the following regarding AMN Healthcare Services, Inc. (NYSE:AMN) in its Q4 2024 investor letter:

"Temporary nurse staffing company AMN Healthcare Services, Inc.'s (NYSE:AMN) fundamentals have been challenged since 2022. During the pandemic, the company’s billing rates reached record highs. As health services normalized, so did their billing rates. Although we believed we’d reached a trough in the company’s valuation and fundamentals, we were wrong. We’ve decided to exit the position and reassess the business as we uncover further evidence of industry stabilization."

A healthcare professional in scrubs, busy at work at a hospital.

AMN Healthcare Services, Inc. (NYSE:AMN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held AMN Healthcare Services, Inc. (NYSE:AMN) at the end of the third quarter which was 21 in the previous quarter. In the third quarter of 2024, AMN Healthcare Services, Inc. (NYSE:AMN) reported consolidated revenue of $688 million, down 19% from the third quarter of 2023 and down 7% sequentially. While we acknowledge the potential of AMN Healthcare Services, Inc. (NYSE:AMN) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article we discussed AMN Healthcare Services, Inc. (NYSE:AMN) and shared Polen U.S. Small Company Growth Strategy's views on the company. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.